DOGE disaster: Lessons from Musk’s efficiency crusade - Ivo Vegter

Key topics:Musk’s DOGE cuts backfired, harming services and global health aidDOGE “savings” fell far short, causing costly fallout and lost revenueReal reform needs audits, not chainsaws – and sober leadership.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..By Ivo Vegter.When Donald Trump appointed former first buddy Elon Musk to head up a Department of Government Efficiency (DOGE), observers of a classically liberal persuasion – meaning they support free markets under limited government – were excited.Jonathan Katzenellenbogen penned an opinion suggesting that DOGE could be “a new gold standard for governments,” calling it “a symbol of a big commitment to budget cuts and deregulation”.At the time, the promise was that DOGE could cut $2 trillion from the expenditure side of the US budget, which is more than the $1.7 trillion budgeted for discretionary spending.Katzenellenbogen voiced the perennial libertarian critique of our ever-growing governments: “DOGE-type departments are desperately needed around the world. Despite a digital revolution and the transformation of economies, many governments have hardly changed in what they do and how they do it. Few have fully embraced digital government with its savings. Very rarely is there deep internal questioning about whether governments should in fact be performing a particular activity, even in the face of years of failure. Regulations that were implemented years ago just seem to stay forever, due to bureaucratic inertia and the protection of vested interests, often involving the civil servants themselves.”Yet he also raised some doubts, which included the actual power such a department might have, and where in government budgets – between debt service costs and legislated entitlement funding – it might find oodles of waste to cut.Government wasteThat there is a lot of waste in government activities is not controversial. Governments are notoriously poor at operating public services, and routinely overspend – sometimes by orders of magnitude – on procurement, either out of ignorance, or because of corruption.That the private sector is, by comparison, far more efficient, is also indisputable. The requirement to either make a profit or fail means management must not only constantly look for ways to increase revenue, but also keep a hawk’s eye on costs.So superficially, it makes sense to appoint a successful private-sector manager to oversee a government efficiency programme.It is not so simple, however, and the failure of DOGE less than six months into Trump’s second term points to some reasons why.Let’s leave aside the impropriety of appointing someone who owns and operates several significant companies that are heavily dependent on regulation by the very agencies that a DOGE department would be targeting for cuts. The first lesson really ought to be that one ought to appoint a retired éminence grise with no direct conflicts of interest to spearhead government cuts, instead of roping in a wealthy tycoon.FailureLet’s consider some of the ways in which DOGE failed.According to the executive order that established it, DOGE’s primary mandate was to modernise technology and software systems to maximise efficiency and productivity.It has not done any of this, and its 18-month mandate seems far too short to comprehensively overhaul government IT systems.DOGE’s actions appear to be limited to cancelling funding to some organisations, and initiating mass layoffs of civil service employees.The most high-profile organisation that was entirely dismantled was the US Agency for International Development, which spent a relatively meagre amount ($23 billion per year) on global health, disaster relief, socioeconomic development, environmental protection, democratic governance, and education. This was a core element of the “soft power” America projected around the world.DOGE considered it wasteful.In reality, the cuts gutted programmes to research and combat a multitude of deadly diseases, including HIV, malaria, cholera, cervical cancer, and tuberculosis. This affected tens of millions of people around the world.One model estimates that DOGE’s USAID cuts likely caused the deaths of some 300,000 people, most of them children. Musk and Trump responded with insults and epithets.HeistEven by its own account, DOGE has “saved” only about $180 billion. However, many of these savings are disputed or have been shown to be errors (or lies). They also came at a significant cost: $135 billion by one estimate, and $500 billion in lost tax revenue according to the IRS.Actual auditors expressed horror at DOGE’s actions, saying it cannot be compared to real auditing. There are generally accepted procedures for auditing, and DOGE’s staff followed none of them. One auditor told Wired that what was going on was no audit, but “a heist, stealing a vast amount of government data.”Whatever the actual “saving”, if any, brought about by DOGE’s chaotic reign of terror, it is at least an order of magnitude smaller than the $2 trillion that was initially projected, and it will certainly never even come close.Instead of making the government more efficient, it did the opposite. A former DOGE engineer told the media that all the waste, fraud and abuse the department was supposed to uncover were “relatively non-existent”.“I personally was pretty surprised, actually, at how efficient the government was,” the engineer told NPR.EfficiencyThis shouldn’t be that surprising. If you fire a lot of civil servants, but the agencies from which they are fired are still required to fulfil their legislated mandates, you are likely to get less efficiency.If you cancel all contracts with companies that implement diversity, equity, and inclusion programmes, you’ll have to find other companies to do that work, and the pool from which you can hire them becomes smaller.Musk might brag that DOGE staff worked “120 hours a week”, but that is not “efficiency”. That is dangerous exploitation of staff that leaves less than seven hours per day to eat, bathe and sleep.Trying to make government more efficient by making remaining civil servants work longer hours is not likely to do much for morale, and that will make government less efficient.If you wanted to give free markets a bad name, I can’t imagine a better way to do it than brag about how you work your staff to death. In fact, if you wanted to make austerity or government efficiency unpopular, I couldn’t think of a better way to do it than a Musk-style DOGE.MeasuringOne core problem is that there is no easy way to measure whether government services are efficiently delivered.Unlike in the private sector, many government services have no access to a price mechanism that can measure the value obtained for a given cost. Many government services are government services precisely because there is no good business case for the private sector to deliver them. Examples are medical care for the poor, or welfare programmes, or, road infrastructure, or sewerage systems.Trying to assess the relative efficiency of such services requires complex benchmarking exercises. You can’t make them more efficient by randomly firing people, or randomly cancelling contracts, and seeing what breaks.DOGE has been too aggressive with its mass layoffs: “Across the government,” reports the Washington Post, “the Trump administration is scrambling to rehire many federal employees dismissed under DOGE’s staff-slashing initiatives after wiping out entire offices, in some cases imperilling key services such as weather forecasting and the drug approval process.LegislationDOGE went about its business with reckless abandon and ill-disguised glee. What it didn’t do was think about how it could achieve at least some its objectives in an orderly fashion.Unlike in South Africa, the civil service wage bill is not a particularly large expense in the US. It amounts to perhaps $300 billion in a $6.8 trillion budget. Even firing everyone wouldn’t come anywhere near closing the budget deficit of $1.8 trillion in 2024.Most government spending is entitlement spending on programmes like Medicare, Medicaid, and Social Security, which Trump explicitly said he wouldn’t touch, and which therefore was off limits to DOGE.All government spending is mandated by legislation passed in Congress. When government departments are allocated budgets, they are legally required to spend those budgets. If you want them to spend less, you need to tackle the legislation that authorises their budgets.Instead, Trump is celebrating his “One, Big, Beautiful Bill”, which will increase the US budget deficit and raise the national debt by between $2.3 trillion and $5 trillion, depending on how you estimate it. (For the record, the White House calls the Congressional Budget Office’s estimate a “hoax”.)How to DOGEInstead of throwing government services into disarray, at huge costs to individuals and businesses large and small, a proper programme to improve government efficiency would begin in the legislature.The legislature controls the purse strings, and only legislation can substantially adjust government spending.And legislation is not the first step. The first step is to conduct a comprehensive, professional audit of every government department and civil service agency, to discover where inefficiencies lie and where wasteful or corrupt spending occurs.A chainsaw might be a great political prop, but actually taking a chainsaw to the civil service is reckless, and in many cases, outright cruel.Successful reform requires a scalpel. It requires thought and consultation. It requires evidence and documentation. It requires consideration and empathy.And most importantly, it requires sober adults in charge..*This article was first published by Daily Friend and is republished with permission

DOGE disaster: Lessons from Musk’s efficiency crusade - Ivo Vegter

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